CG Power locked in lower circuit for second straight day on financial fraud

Shares of CG Power and Industrial Solutions were locked in 20 per cent lower circuit for the second consecutive day at Rs 11.80 on the BSE on Wednesday after the detection of financial fraud in the company.

At 10:32 am, there were pending sell orders for 19 million shares, representing 3 per cent of CG Power's total equity, on the NSE and BSE. Around 395,000 shares have changed hands on both the exchanges till now, data shows.

An audit committee of CG Power flagged off unauthorised transactions by certain employees of the company leading to an understatement of not only the company’s liabilities but also advances to related and unrelated parties of the group.

In its regulatory filing on Tuesday, CG Power said certain aspects of the company were purportedly provided for as collateral without due authority. The company was made a co-borrower or guarantor ostensibly for enabling unrelated third parties to obtain loans without due authorisation. The company also said these findings will impact financial results reported for the last three financial years. CLICK HERE FOR COMPANY RELEASE

Meanwhile, according to this Business Standard report, the Ministry of Corporate Affairs (MCA) has ordered an inspection into the affairs of the company.

“The inspection report will be ready soon and appropriate action will be taken,” the report suggested, quoting a senior government official.